Track record will always trounce scale and distribution
The Tribeca district in New York is known for being close to Wall Street, but distinctly not part of it and, this same approach has steered Tribeca Investment Partners over the best part of the past two decades.
Australian financial planners are relatively blessed when it comes to the selection of boutique fund managers available for retail investments, with at least 35 managers offering funds at the present time.
However, as a portfolio manager at Tribeca Investment Partners, Sean Fenton knows that new managers are not frequent arrivals and those who are on the scene at present are working hard to carve out their own place and distinct offering.
"It is hard to launch a new manager, which is why we have seen only a few in recent years. The current regulatory environment has not eased up on fund managers," Fenton said.
"The other issue is that of track record and unless a fund manager or portfolio manager has a long-term track record, there will always be a credibility gap."
As manager of the Tribeca Alpha Plus fund, Fenton brings 20 years of his own experience to the table, having joined Tribeca in 2004, and teams this with the 17-year history of Tribeca, which first began life in 1998 as Jenkins Asset Management before rebranding in 2007.
The Tribeca name comes from the New York district of the same name with Tribeca managing director, David Aylward, choosing it because of the area's closeness but separation from Wall Street. It acts as an appropriate metaphor of the group's desire to be distinct from the mainstream.
As Fenton sees it, the mainstream space is shifting quickly with investors not willing to pay highly for beta and instead seeking cheaper sources for returns as questions are raised around the ability to generate alpha.
"There is a growing concern around the ability of some fund managers to both deliver alpha and hold on to huge levels of funds under management (FUM) and levels of distribution of their products," Fenton said.
"We believe this has built up the attraction of boutique in recent years because they have focussed on alpha from the outset while some of the larger managers have built distribution and sales but lost their focus on funds management."
Fenton said many boutique managers have aimed to gain market presence by partnering with other firms who can provide marketing and distribution clout with Tribeca working with Grant Samuel Funds Management to promote the manager and its four funds.
He admits that Tribeca may not be as well known among the retail advice sector as some other boutique managers, as around 90 per cent of its $1.7 billion in FUM has come via institutional investors.
"The institutional path is a lower risk way to establishing FUM and comes with less touch points but we are now seeing more momentum and interest from the retail investment sector," Fenton said.
This has come from Tribeca spending the last 12 months looking at further product development, which led to the launch of its Global Natural Resources fund in September 2014 joining the group's Global Total Return Fund, Smaller Companies Fund, and Alpha Plus Fund. At the same time, Fenton said Tribeca has invested in its systems around portfolio management and was pushing its scope in investing internationally.
He said boutique managers were able to benefit from technology changes in this area with the availability of data around prices, forecasts and the economics of investments more open and accessible than ever before.
"Hedge funds brought that scope and openness to the wider investment market and prime brokerage has internationalised banking and broking opening which is good for us as a small scale manager as it reduces fees in those areas and overall fees across the board."
"This is important because there has been a shift in people looking at getting more for what they are paying. Investors are also putting pressure on their advisers to justify their fees," Fenton said.
"Our role then is to communicate our competitive advantage so advisers can be comfortable in telling their clients what they are doing under their duty of care to them."
Tribeca Investment Partners
Year manager was founded: 1998
Number of Employees:17
Key Personnel:
- Managing director: David Aylward
- Chief operating officer: Kylie Osgood
Investment styles used: Blend of traditional fundamental research with quantitative analysis.
Asset Classes covered: All major asset classes
Leading Funds:
Tribeca Alpha Plus Fund
- Manager - Sean Fenton
- Minimum investment amount: $25,000
- Fees/MER: 0.97 per cent per annum
- Last 12 months performance of fund: gross +18.85%, alpha +22.01% (to 31 August 2015)
Tribeca Australian Smaller Companies Fund
- Manager - David Aylward & Simon Brown
- Minimum investment amount: $25,000
- Fees/MER: 0.92 per cent per annum
- Last 12 months performance of fund: gross -5.50%, alpha +4.12% (to 31 August 2015
Research house ratings for fund: Lonsec, Zenith
Major platforms through which funds are available: ASGARD, BT WRAP, MLC Wrap, MQ Wrap, IOOF, Netwealth, Avanteos Ausmaq
Total FUM: $1.7 billion
AUTHOR
Jason Spits
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